California Middle Class Tax Refund- You May Not Be Required to Report

AUTHOR: ROGER BEEBOUT, CPA

The Internal Revenue Service announced on February 10, 2023, that taxpayers in many states will not need to report special state payments received on their 2022 returns - including the California Middle Class Tax Refund.

 Residents from the following states will not be required to report the state payments on their 2022 tax returns – California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island. Specified payments made by Alaska are also not going to be taxed. Taxpayers in Georgia, Massachusetts, South Carolina, and Virginia also will receive similar benefits, but must meet certain additional requirements.

 The IRS has not explicitly stated that these payments are excludable IRC §139 disaster relief payments or qualify for the general welfare exclusion. Rather, they stated they might qualify, but that given the complexity of the issue and the fact that this is the middle of tax season and is only relevant for the 2022 tax year, they are simply not going to challenge a taxpayer’s treatment of these payments as excludable from gross income.

If you have any questions, contact support@bwocpa.com

 See the IRS Announcement here.